Friday, July 5, 2013

I recently got to spend some time in our nation's capital, Washington, D.C. It turns out this is sort of like a bar mitzvah for people who are interested in law and politics. How do you know you've come of age as someone interested in policy? You've interned in D.C. at least one summer.

It's a great city - it's kind of quaint (the Washington Monument is basically the closest thing to a skyscraper ... and it's an obelisk), it's laid out on a confusing grid system (letters, numbers, states, and "words of the Republic"), and if you look closely, you can see Nicholas Cage stealing the Declaration of Independence.

Is that the Declaration or a telescope?

Sadly, the Metro system is NOT an excellent part of D.C. Oh sure, it gets you around town, and it's very clean, and you feel kind of like an alien in a space portal. But the pricing system is really quite mean.

"A long time ago in a galaxy far,
far away ..."

Let's establish some backstory here. I went to college in New York City. As a poor student who would rather spend money on shoes and dessert than basically anything else, I walked nearly everywhere. I was too cheap to take the subway, and taxi cabs were chariots of the gods. IF I took the subway, it was because I had a long way to go - probably to another borough. In NYC, the subway is a flat fee. It costs the same amount of money to ride one stop down as it does to ride to the end of the line. That meant that I could really get my money's worth by only riding when I was going to use a significant amount of subway services. As you know, getting my money's worth is practically a full-time hobby for me.

But the D.C. Metro, in all of its bureaucratic glory, had outsmarted me. How? Because the farther you ride, the more you pay. To add insult to wallet-conscious-injury, the bus is a flat fee. What did this mean for me?

Well, I commuted from West Falls Church, VA, all the way to the Hill. I was in Falls Church because a dear friend let me sleep on her futon, practically rent-free—thus proving either that miracles DO

Life goal: be this kid, as cheaply
as possible.

happen, or that you should make friends with people who own futons and live in expensive cities.

Every day, I took the bus to the Metro station ($1.60 flat fee with a SmarTrip Card, $1.80 flat fee cash - no change given), then took the Metro all the way to the Capital South stop. It cost about $5 ... each direction. Can I tell you that spending $10 commuting every day is THE WORST? Happily I caught some rides with my aunt, and my roommate would usually pick me up from the Metro station so that I didn't have to bus twice. BUT STILL.

Why does D.C. do this? Well, I have three theories, which I've laid out below:

Tie consumption to price - this theory says that fewer people are going to need to haul themselves out to West Falls Church than to Gallery Place/Chinatown. The Metro is a public good, so if you can charge people based on how much of the good they use, that's actually more efficient in the long run. Of course, you'd have to make sure the supply and demand met and that the pricing structure accurately reflected the elasticity of the need and use. Presumably, the farther away people live, the more likely they are to have cars, which makes the farther stops more elastic. The farther away people are, the more likely it is that they're routine uses —their consumption patterns aren't going to change, unlike the

They'll be gone soon - only
to be replaced.

tourists who are in and out of D.C. all the time, and really only use the Metro around the monuments. It's theoretically unfair to make the concentrated, one-time users subsidize the dispersed, routine commuters.

Vindictively punish people trying to save money in the 'burbs - D.C. is an expensive place to live. So people live in surrounding cities in Virginia and Maryland to save on rent. But if you don't live in D.C., you really need a car, which brings costs of gas, insurance, and occasional repairs. You also now have to pay more for the Metro. Your commute is longer, which translates into sunk costs commuting (though these can be recovered through reading or listening to music/books on tape). Even though people COULD theoretically drive in, that translates into even more sunk time commuting, plus the need to pay for parking, or move the car around every

Not really a viable alternative ...

few hours. The bureaucrats know that these are both terrible options, and that pricing isn't really as elastic as it could be, so they can have a pay-more-for-more-riding system.

Blindly institute a system that punishes repeat customers the most - let's face it. The D.C. Metro is a public project, and even if it's run by the most competent business mind in America, it doesn't have to answer to the market; it reaps the benefits of monopoly. In most industries, it's very rare to see your customers twice a day, five days a week (even most loyal Starbucks drinkers are only in

"Fourth Coffee: Buy 10, don't get
fourth one free."

once a day). This kind of routine, repeat business would typically garner thank-yous and benefits, because it's far more profitable to keep an existing customer than to acquire a new short-term one. Instead, the repeat customers end up paying more than new, briefly-acquired ones.

Overall, the D.C. Metro is probably priced accurately for use. But as someone who was using it more, I sure would have liked to free-ride on a flat fee a bit more.